Crowdfunding sites such as KickStarter, have grown in popularity. The concept is simple – you have an idea, formulate the logistics of the plan, and then upload the idea to a crowdfunding website, where millions of potential investors can scrutinise it, and if they like it, pledge to invest in the project. If the project raises the target capital, the funds are automatically transferred, and the idea becomes a reality. If the target is not met, no money is transferred, so no investors lose out. Essentially it's Dragon's Den for the internet generation, leveraging the almost perfect liquidity of the online marketplace.

While this might be a viable option for certain business ideas, there will be others which should stay away from crowdfunding platforms in their early stages. For example, a product-based concept such as Mandy Haberman's Anywayup Cup could not have succeeded had she not patented the cup before going to market. As it was, she had to fend off copycat products through litigation in the courts. Without a patent, it would have been impossible to compete against well-resourced manufacturers.

In their haste to rush to market quickly, many entrepreneurs are making a classic mistake – failing to protect their intellectual property (IP) before revealing their ideas. Patents are only granted if an invention is novel, and has not been disclosed to third parties. Therefore, if you raise investment through crowdfunding sites, before securing a patent, then you lose the possibility of patenting the concept later on.

Many entrepreneurs lack the funds to seek legal advice, and may assume they can raise the funds to patent through the crowdfunding sites. They naively assume these sites must have thought through the legal aspects on their behalf. However, in practice you may need to find the funds to file an initial patent pending application, whether you're speaking to angel investors or seeking crowdfunding because few investors agree to sign non-disclosure agreements (NDAs) before listening to your opening pitch. Your credibility is bolstered enormously if you understand this, and have taken steps to protect your concept beforehand. They will deem you more attractive.

Another issue to be aware of is that well-resourced competitors are scouring these sites, and are free to exploit the technology or concept you just shared with the world. Would you be sabotaging your idea by alerting someone to it who is well placed to copy it?

In 2010, Scott Wilson was congratulated for successfully raising $942,578 on KickStarter to launch the TikTok Lunatik watch kit, a sleek new aluminium watch strap, which converted an iPod Nano into a touchscreen watch. The design and trade mark had not been protected. It proved immensely popular. Copycat imitations began to spring up around the web. The market is now flooded with fake Lunatik watches.

The moral is clear. If you're considering using a crowdfunding platform, invest in early IP advice first.

Shireen Smith is the founder of Azrights Solicitors and the author of Legally Branded, a book that explains how to protect intellectual property rights before launching.